Welcome to the MPLX earnings call. My name is Cynthia and I will be your operator for today's call. At this time, all participants are in a listen-only mode. (Operator Instructions). Please note that this conference is being recorded. I will now turn the call over to Lisa Wilson, Director of Investor Relations. Lisa, you may begin.

Thanks, Cynthia. Good morning and welcome to MPLX's first-quarter 2017 earnings webcast and conference call. The synchronized slides that accompany this call can be found on MPLX.com under the Investors tab.

On the call today are Gary Heminger, Chairman and CEO; Don Templin, President; Pam Beall, Chief Financial Officer; and other members of the management team.

We invite you to read the Safe Harbor statements and non-GAAP disclaimer on slide 2. It is a reminder that we will be making forward-looking statements during the call and the question-and-answer session that follows. Actual results may differ materially from that we expect today. Factors that could cause actual results to differ are included there, as well as in our filings with the SEC. Now I will turn the call over to Gary Heminger for opening remarks on slide 3. Gary.

Thanks, Lisa. Good morning and thank you for joining our call. Earlier today, MPLX reported solid operational and financial results for the quarter with adjusted EBITDA of $423 million and distributable cash flow of $354 million.

The partnership continues to pursue and execute on a number of strategic growth opportunities supporting a diverse set of producer customers in some of the nation's most prolific shale plays.

We are also excited about the progress we are making related to the strategic actions we announced earlier this year. We completed the first of several planned dropdowns from MPC on March 1. Work to prepare the remaining assets for dropdown to MPLX remains on schedule.

In conjunction with the completion of the dropdowns, we expect to exchange newly issued MPLX common units for MPC's general partner economic interest, including incentive distribution rights. All of these transactions are subject to requisite approvals, market and other conditions, including tax and other regulatory clearances.

These strategic actions are expected to double the size of the partnership, lower our cost of capital and enhance our long-term distribution growth capabilities all while maintaining an investment-grade profile.

Thanks, Gary. Moving to slide 4, I'm pleased to report the completion of several strategic transactions during the quarter that provide additional sources of fee-based revenues and expand the footprint of our Logistics and Storage segment.

In addition to the dropdown assets Gary referred to earlier, we acquired an indirect equity interest in the Bakken Pipeline system. This system will have the capacity to deliver in excess of 470,000 barrels per day of crude from the Bakken to the Midwest and Gulf Coast markets.

We also purchased the Ozark Pipeline, a 22-inch crude line that runs from Cushing, Oklahoma to Wood River, Illinois. Ozark connects to our extensive Midwest pipeline network and provides crude oil supply flexibility to our sponsor, MPC and other third-party refiners in the Midwest.

As a part of our growth strategy, we plan to expand the capacity of this pipeline from 230,000 barrels per day to 345,000 barrels per day by the second quarter of 2018.

Work also continues on the construction of the Harpster to Lima pipeline and expansions to the East Sparta to Heath and Heath to Findlay pipelines. These projects remain on target for a mid-2017 completion.

In combination with the recently completed Cornerstone Pipeline, these assets are designed to provide an industry solution by moving condensate and natural gasoline out of the Marcellus and Utica region into Midwest refining centers and into Canada.

Moving to our Gathering and Processing segment, slide 5 provides an overview of our operations in the Marcellus and Utica Shale. In the first quarter, we finalized strategic long-term commercial relationships with two of our largest producer customers in the Northeast. We amended and extended gathering, processing and fractionation agreements with Range Resources to support the development of its rich gas acreage in the Northeast.

We also formed a joint venture with Antero Midstream to support the development of Antero Resources' extensive rich gas position in the Marcellus.

For the first quarter, process gas volumes in the Marcellus and Utica averaged 4.6 billion cubic feet per day representing a 4% increase over the fourth quarter and an 8% increase over the same quarter last year. Our utilization rate for the quarter was 83%.

The seventh plant at the Sherwood Complex was placed in service in early March and volumes at this complex continue to ramp quickly averaging nearly 1.3 billion cubic feet per day for the quarter. We remain on schedule to place Sherwood 8 in service in the third quarter and have two additional processing plants at this complex scheduled to complete in 2018.

These plant additions further strengthen our position as the largest processor and fractionator in the Northeast. Overall, we expect a 10% to 15% increase in process volumes and a 3% to 6% increase in gathered volumes in 2017.

Slide 6 provides a summary of our fractionated volumes from Marcellus and Utica where we produced 334,000 barrels per day of ethane and heavier NGLs during the first quarter. Operations of the third fractionation train at our Hopedale Complex commenced during the quarter, increasing the total capacity of this complex to 180,000 barrels per day.

We also continue infrastructure buildouts at our Keystone and Majorsville complexes with a total of 60,000 barrels per day of incremental de-ethanization capacity expected to come online during the second half of the year. These additions support a growth forecast of 15% to 20% in fractionated volumes versus the prior year.

On slide 7, we provide an overview of our Southwest operations. For the quarter, we processed nearly 1.2 billion cubic feet per day of natural gas while plant utilization was 80%.

Processed volumes continue to increase at our Hidalgo Complex in the Delaware Basin of West Texas with utilization averaging 96% for the quarter. To support additional demand, we began construction of a second 200 million cubic feet per day gas processing plant adjacent to our existing Hidalgo plant with expected completion in early 2018. We refer to this plant as Argo I.

For 2017, we forecast process volumes to increase by 3% to 8% with growth driven by both the Hidalgo Complex, as well as incremental infrastructure to support newfield STACK resource play in the Cana Woodford Shale.

I am very proud of the consistently strong operational and financial results that my team has delivered since the beginning of 2016. Our focus on providing increased visibility to growth from successfully executing on the dropdown transactions, eliminating IDRs and continuing our investment in organic growth projects positions us well to improve our cost of capital and to deliver long-term value for our investors.

Now I will turn it over to Pam to review our financial results and position.

Thanks, Don. If you turn to slide 8, it provides a summary of our capital expenditure program. We updated our 2017 organic growth capital expenditures forecast to a range of $1.8 billion to $2 billion and that is up from $1.4 billion to $1.7 billion.

The Gathering and Processing segment now includes capital to support additional infrastructure in both the Delaware Basin in the Southwest and the Sherwood Complex in the Marcellus Basin.

The Logistics and Storage segment budget was also increased primarily to reflect the announced Ozark Pipeline expansion project and the dropdowns from the assets acquired from our sponsor in the first quarter.

Our maintenance capital forecast increased to approximately $150 million, an increase of $50 million related to the assets acquired during the quarter, including the Ozark Pipeline and the terminal pipeline and storage assets purchased from MPC.

Turning to our financial highlights on slide 9, we reported adjusted EBITDA of $423 million and distributable cash flow of $354 million for the first quarter of 2017. Approximately two-thirds of segment operating income for the quarter was generated by gathering and processing segment.

The bridge on slide 10 shows the change in adjusted EBITDA from the first quarter of 2016 compared to the first quarter of 2017. Since the prior-year quarter, we increased adjusted EBITDA by $121 million. The increase in the logistics and storage segment, adjusted EBITDA was primarily driven by the addition of marine business acquired last year and the terminal pipeline and storage assets acquired from MPC in the first quarter of 2017.

Higher volumes and increased NGL prices accounted for the majority of the change in the gathering and processing segment.

Slide 11 provides a summary of key financial highlights and select balance sheet information. In February, we issued a total of $2.25 billion in 10-year and 30-year senior unsecured notes. We used a significant portion of the net proceeds of this offering to fund the March 1 dropdown from MPC and expect to use the remaining proceeds for general partnership purposes, including future dropdowns and capital expenditures.

While the first dropdown was funded with approximately 75% debt, we expect financing for the dropdowns in total to average approximately equal portions of debt and equity. We anticipate funding the equity portion through LP units issued to MPC and do not expect to raise public equity for the dropdowns.

At the end of the first quarter, we had $265 million of cash on hand, approximately $2 billion available on our bank revolver and the full $500 million available on our intercompany facility with MPC. We also continued to utilize our ATM program during the quarter, opportunistically issuing 4.2 million new common units for net proceeds of approximately $148 million.

We are committed to maintaining a strong balance sheet and investment-grade credit profile and ended the quarter with a leverage ratio of 4 times, which is consistent with our target of 4 times or less. With $2.8 billion of liquidity and access to the capital markets, the partnership is well-positioned to finance its robust growth capital investment plan and the remaining dropdown acquisitions in 2017.

On slide 12, we've revised our 2017 forecast based on acquisitions in the first quarter and our expectations for producer volumes, forecasted commodity prices and our strategy of deploying capital on a just-in-time basis.

Excluding the impact of future dropdowns, adjusted EBITDA is forecast in the range of $1.7 billion to $1.85 billion and distributable cash flow is forecast in the range of $1.25 billion to $1.4 billion.

We have a strong record of growing distributions to our unitholders. Based on our quarterly financial performance, the Board of Directors of our general partner declared a distribution of $0.54 per common unit. The first-quarter 2017 distribution represents a 7% increase over the same period last year and marks the 17th consecutive quarterly increase since our initial public offering in October of 2012.

We reaffirm our guidance of 12% to 15% distribution growth rate over the prior year and a double-digit growth rate in 2018. With the strategic initiatives announced earlier this year, a robust backlog of organic projects and a strong balance sheet, we remain confident in our long-term value proposition for our investors.

Thanks, Pam. As we open the call for questions, we ask that you limit yourself to one question plus a follow-up. You may re-prompt for additional questions as time permits. With that, we will now open the call to questions. Cynthia.

I was wondering if we can first start off with the dropdowns and financing strategies. On a go-forward basis here, do you see an opportunity for the dropdowns to accelerate? And then with respect to financing them, you continue to talk about 50/50 debt equity and so forth. Do the units get taken back to MPC or do we continue to issue equity at this stage right now?

I will take that question. So as we noted, the first drop was financed more heavily with debt, 75% with debt and 25% equity. And so what we have said and we continue to reinforce is that through all the drops, we would expect the 50% debt and 50% equity with all the equity being issued in new units issued to the sponsor.

And then with respect to organic growth, we really would expect a similar profile in terms of funding, so 50% debt, 50% equity. And we are confident with the liquidity that we have available to us and the ATM program that we have had in place, we are confident that we can issue the equity in the market the way we need to to finance the plan.

So with respect to just that, when we think about ATM issuances on a go-forward basis, given that your leverage has shown some improvement, do you lay off the ATM issuances outside of just CapEx? In other words, if we see something announced, then we can expect that there would be issuances, but outside of a specific project or CapEx added to the backlog that we could see actually the level of ATM issuances slow a little bit?

Well, we are at 4 times debt to EBITDA, which is the ratio that we said we would like to maintain or be lower than that. And again, I think it was just a funding mix as we -- the sponsor has certain motivations in terms of the equity it would like to take back in terms of managing the tax leakage that it would have on drops.

So if the drops were more heavily financed with debt in the first part of the year, drops in the back half of the year may be more equity that would be issued in terms of new issuance to MPC and that's a substantial part of the plan for the year.

But in terms of the organic growth, again, we think that we can easily issue the equity that we need to through the ATM program. Maybe I'm missing your question.

We can take it offline. As a follow-up question, you've been asked this question in the past and I was just wondering if we can break it down a little bit further. Post-drops, there's an expectation that you still see opportunities to be able to grow. I was wondering if you can talk about the backlog, but to break it up into the separate components. You've talked about organic growth at gathering and processing in the past. Do you see producers shifting to wet gas and that could potentially be accelerated or that's on path?

And then, secondly, if you can specifically talk to the crude logistics side, relaxing of CAFE standards and so forth. It seems you are backing away from the timeline on the BTA facility. Do you see other opportunities there? If you can talk about the backlog on crude logistics as well also.

Sure. Our strategy has not really changed in terms of what we are trying to accomplish, which is to reduce our cost of capital or have a very attractive cost of capital. We think the way you do that is you provide increasing visibility to our growth and we are very focused on building the backlog.

Right now, there seems to be some really great opportunities in the Marcellus and also ones that are continuing to develop in the Permian Delaware Basin. So we are very focused on that right now.

When we get to the end of the year, we will be a company -- after the dropdowns -- we will be a company that is largely or around $3 billion of EBITDA. Largely half of that will be logistics and storage and half of that will be from the G&P side of the business and we are going to need to grow both sides of those businesses and we are looking at a number of opportunities. Some of them will be organic on the L&S side, but some of them may also include being involved in the M&A market to the extent that there are attractive assets that make a lot of sense in terms of the asset profile that we have and the opportunities that we see in the future.

So I would expect that the L&S side of the business will continue to be an important part of growing our organic growth and with an attractive cost of capital, I also think we will be very well-positioned to participate in acquisition opportunities to the extent when and if those arise.

So gross CapEx was up again because you guys got some good project wins this quarter, so maybe honing my questions in on some of those today. First, in the Northeast, you guys have those two producer wins you talked about earlier. Could you provide maybe a little more color on the Antero deal and thoughts around opportunities to have other similarly structured projects with some of the other regional players up there?

I guess you did note that our CapEx budget or forecast is up to about $2 billion and the key contributors or the key changes from the last time that we spoke, one would be that Argo (technical difficulty), the 200 million cubic foot per day plant that we are planning to construct in the Delaware Basin adjacent to our Hidalgo plant.

Two other items would be Sherwood 9 and Sherwood 10, so those are clearly very focused on and a result of the Antero Midstream joint venture. And I will talk about that in just a second.

And then I would say the other bucket of increase really relates to capital that's being spent, growth capital that is being spent to support the dropdowns, so the terminals and the pipelines that we already just dropped in the first quarter, as well as the Ozark expansion. So I mentioned that we are looking to expand that pipeline by 115,000 barrels a day. That targeted completion date is the middle of 2018. So those three or four items are the major items that have contributed to the increase in our forecast.

With respect to the Antero-Sherwood joint venture, we continue to be very enthusiastic about that. We think it has positioned us for the long term to be able to plan around a geography with a major producer customer that gives us a lot of line of sight to growth not only in 2018, but beyond 2018 and we think that's really an important part of growing our earnings backlog or our organic growth backlog so we can continue to provide that visibility to growth that I think all the investors and you all desire.

All right. And then on my follow-up, you alluded to -- or you mentioned Argo I as well and you called it one on the note of the Delaware. Does that mean maybe there's an Argo II, III coming? If you could help me think about the growth platform there and maybe also other growth projects in the Southwest. I know GPOR is a customer and now they are in the SCOOP/STACK, so how do I think about other opportunities there as well?

We are very focused -- I think the Delaware obviously is attracting a lot of capital right now. We really like our position. Hidalgo performed brilliantly from the time that we brought that and commenced operations there and I would suggest that I think there is continuing opportunities. We are not at a position yet to announce incremental plants, but our team is very, very focused on expanding the producer customer base that we have there and identifying we will call it solutions to allow those producer customers to be able to go deploy their drilling capital appropriately and to be able to do that with the confidence that it will be gathered, processed and find an end market that will get them an appropriate netback.

So I think we have consistently said given (technical difficulty) or the Permian generally, we would expect the majority of our capital or a big piece of our capital will be deployed in Marcellus, but we expect to deploy more of our capital -- second place will be the Southwest versus Utica because we see that as the near-term opportunity and we want to be well-positioned, Kristina, to be able to grow with producer customers in that area.

Just wanted to follow up on your Appalachian JV there. It seems like there's a lot of processing capacity that you guys are looking to bring online there and just wondering if you could provide a little bit more color as far as what you think the timeline to those expansions could look like and how utilization could ramp there.

Well, we have indicated that 7 just came on; 8 will come on in the third quarter. We expect 9 and 10 will both come on onstream in 2018 at I won't say exactly six-month intervals, but that's the pace at which we are going right now and I am very confident that we won't be stopping there.

So we have a producer customer that has a very robust drilling program that they have publicly talked about and we expect to be there to support them as they continue to develop their resource.

Well, I think that will really be dependent on our producer customer. I think what we really pride ourselves on is being able to deliver the facilities that our customers need when they need them and we work very closely not only with Antero, but we are working very closely with the other very big and important players in that region to make sure that we are developing assets and bringing them online in a manner that allows them to maximize and efficiently their production.

So we are working with obviously Range Resources at our Houston plant and Harmon Creek. We are actively engaged with other producer customers, but there's a sense of urgency to get those plants completed and we are working as expeditiously as we can to make sure that that happens.

We are really excited about the potential of the Range acreage around the Harmon Creek area, which is north of our traditional gathering area. But the opportunity there is that with the pipeline system we are building to continue to gather and grow with Range as they move to new areas to gather their gas. We have the ability in the interim to utilize our Houston plant capacity and as Harmon Creek comes online to actually move gas north or south. We will have the ability to recover ethane. We will have the ability to produce C3+ propane and heavier products and pipeline that down to our Houston fractionator.

So it integrates nicely. It will give us more processing capacity to support Range, but also the flexibility to move gas between both plants to make sure we maximize utilization.

Nice quarter. I just wanted to just clarify and make sure and confirm on the guidance. So the increase in the guidance, that includes the dropdowns already done, the stakes, the acquisition of Ozark, the stake in Dapple, plus the joint venture with Antero Midstream. Correct?

Yes, that's correct. So if we think about the guidance on the EBITDA was up a couple hundred million dollars, the way I would largely think about that would be that $20 million a month was broadly what those dropdown assets were contributing, so that's what gets you that increase for the remainder of the year.

DCF went up by about $100 million versus the $200 million that you saw in the EBITDA and that's really a function of the fact that the maintenance capital is increasing because of the incremental assets that we have and that we have incremental interest expense from the debt that we issued in the first quarter.

Okay. And then just also I know you commented a little bit on this on the MPC call, but just wanted to confirm on the timing of the dropdowns and IDR exchanges. Is it your expectation now that you think you will have everything done by the end of the year? And I think there was a $350 million EBITDA drop that you were expecting sometime in the third quarter. Is that still the expected trajectory?

So as Gary and Tim spoke about on the MPC call, we are working very diligently and MPC is working very diligently to ready those assets and us to receive them and they to drop them down and we are -- I would say that there's nothing that's changed about our view of the sense of urgency and the diligence around getting those assets prepared for drop.

There was some discussion I think you will recall on that call about the tax implications around the fuels distribution and the qualifying income around the new regulations. If something happened there that caused that to not have certainty around the qualifying income qualifications there, I think Gary had mentioned that there's a potential that there could be a very modest slip from end of 2017 to early 2018 to make sure that they didn't go afoul of the qualifying income rules.

But I think the team is working on an assumption right now, John, that we would be completing all of these in 2017.

And John, the only other point there is, as I said earlier, we've got to be very cognizant of the tax reform language. In fact, the President and Mr. Cohen, and Secretary of the Treasury Mnuchin yesterday just talked about possibly even going to 15%. So we have to be cognizant and I think any shareholder would recognize that if there is a tax leakage possibly of a couple hundred million dollars, by waiting a month or two, that that would really make sense. So our expectations, we will be ready by year-end, but we will see what legislation and changes in federal policy do that reflects the ultimate decision point.

Okay. So in other words, Gary, what you are saying is that, if, from a tax perspective, when tax policy is more clearly known, you will be able to finalize whether it makes more sense to actually go ahead and take care of everything in 2017 or if it actually makes logical sense to let some of that slip into 2018. Is that what you are saying?

So we acquired that obviously in the first quarter. We are working -- it's a 230,000 barrel a day pipeline right now. We are working on expending capital to expand that by, as I said, the 115,000 barrels a day to take us up to 345,000. That's going to be done by the middle of 2018 and we are confident that the large volume of throughput is already contracted or committed on that pipeline.

So there was an open season related to the expansion. It was a successful open season and so as the owners of that pipe, we are very confident about the revenue stream that will come from that. We didn't give an EBITDA number when we bought those assets, but we did I think indicate that we expected to have a mid-teens return from that acquisition and that would include the incremental capital that we would spend to expand the capacity.

Just a quick follow-up to Kristina's question, but first congrats on the new project in the Delaware, the Argo plant. I think MPC made some comments earlier on the call. Just wondering if there's any projects beyond G&P that MPLX is considering such as fractionation and/or pipes. Any color there would be helpful.

Obviously, we need to, as we continue to expand in the Delaware, it's a growth area for us that we are excited about. We continually evaluate residue and NGL takeaway options. Currently, those options are primarily to the Gulf Coast and connections to the Waha hub and to the NGL (technical difficulty).

We will always look at potential opportunities. We obviously have built out fractionation in the Northeast. Currently there is capacity that we utilize on the Gulf. So I think it's something we will continue to evaluate to make sure that our producer customers have access for capacity and optionality to move products out of the basin.

Got it. Okay. That's helpful. And then maybe just as my follow-up, just maybe in reference to John's question about EBITDA guidance. We had this conversation last quarter, but if you just take the midpoint of your previous EBITDA range, that $1.575 billion, you described 10 months of dropdown credit and also Ozark credit and then call it six months of Dapple credit for the 9% interest, that would speak to a midpoint at or even above the high end of your range right now. So just wondering is there still a bit of conservatism in your EBITDA guidance number or are there things in there that maybe we are just not seeing correctly?

I don't think we have anything that we are concerned about that is downward pressure in the back half of the year, Corey. So I think that we wanted to provide a guidance figure that we had a lot of confidence in and I think that we have a lot of confidence in the numbers that we are providing to you.

So on Centennial, the discussions continue between MPC and Enterprise. I think both companies believe that that is a viable option and provides an alternative to producer customers. Obviously, Mariner East II is nearing completion, so that provides access to the East Coast, but we believe our producer customers also want access to the Gulf Coast or incremental access to the Gulf Coast and as we have commented before, I think that we understand the costs that will be incurred to do a reversal. We understand the tariff that needs to be associated with that pipe to make it an attractive alternative to producer customers and I think it's appropriate if producer customers want to have an alternative destination for their product, that they should be making the appropriate level of commitments to make sure that that happens.

So my understanding is that Marathon is working with Enterprise to be able to secure those type of commitments to make it a project that makes sense for all the parties involved.

Okay, great. That's helpful. And then just on the -- I want to just make sure I understood the change in maintenance capital guidance. So I guess obviously a little bit of a crude methodology, but, historically, if I look at your maintenance CapEx as a percentage of EBITDA, it's running around 6%, 7% and so with this latest dropdown, that would imply a much higher rate.

So I'm just wondering are these assets requiring more maintenance than your typical asset or is there something like a special situation going on? Just trying to understand the maintenance capital change.

I will take that one. So let's talk about that a little bit. So the assets in the gathering and processing business are very new, so they have very low maintenance. The assets that are being brought into the partnership from the sponsor are assets that have historically had about a run rate of maybe 14% of EBITDA run rate. And so we are talking about terminals, we are talking about pipelines and we are talking about, in the marine business, barge replacement capital.

Now in terms of special items, we've highlighted that we are at, I would say, a higher amount of maintenance capital that's being focused on horizontal directional drill for river crossings for maintenance that probably we are spending a little more on that in the near term than what we would on an ongoing basis.

And then the gathering and processing is really very small in terms of the maintenance. So it's really all related to the new assets that are coming into the partnership that have been historically spending (technical difficulty) what you would see in the gathering and processing segment.

And the historical maintenance cap on directional drilling of river crossings, this is we believe a best-in-class operation and it's the way we operate pipelines and we feel it's very appropriate to get out in front on a preventive basis and replace some crossings. It's just money well spent for the long term.

Most of my questions have been answered, but going to slide 14 where you guys list out your growth projects, you have NGL pipeline expansions there for 2017 and 2018 in the Marcellus. What does that refer to?

That's providing us incremental capability. We are growing all of that or developing all of that incremental processing capacity at Sherwood and so over time, we are going to, with all that incremental capacity that gets built or constructed at Sherwood, you are going to need to be able to move that up, be it both ethane and the NGLs so that we can get the ethane to appropriate ethane markets and the NGLs to fractionators either at Houston or Hopedale. So when we refer to that, that is one of the primary drivers of that capital.

Well, right now, if you think about how we process, we will process let's say -- let's use Sherwood as an example. So we get the residue gas, the residue gas gets on residue gas pipelines. We then move ethane up a pipeline that goes all the way to Majorsville and then continues on to Hopedale. I'm sorry, to Houston.

We also have NGL pipes that go from Sherwood up that way. They get to Majorsville and then it really hits a Y, if you will. We fill up the Houston plant with those NGLs and fractionate it and we also have the alternative to take it over to Hopedale and we just built another fractionation unit at Hopedale to be able to handle that.

So we move ethane and NGLs from Sherwood North to Majorsville and what we want to do is to make sure that we have ample capacity so that the rampup in gas processing that we are doing at Sherwood and other plants, we can handle those and get them to either an ethane market or we can get them to our fractionation facilities so that we can derive the most value for our customers.

Got it. And as a follow-up, slide 10, which shows the EBITDA buildup from first quarter of 2016 to 2017, shows $32 million for the first-quarter dropdown. Is there seasonality baked in because I have seen that $32 million represents one month, but you guys guided to $250 million? Is there seasonality throughout the year for this particular group of assets?

I wouldn't think that there is a tremendous amount of seasonality. Keep in mind the first quarter of -- well, we had the marine facility that was dropped last year at the end of the quarter and we have a benefit of that for the first year -- the first quarter full quarter and then we just have the drops that occurred here at the beginning of March, but, no, I wouldn't expect a significant amount of seasonality in the business.

We haven't gone public with that information. I think that one of the things that we feel really good about in that region is that we partnered with Chevron and Cimarex on Hidalgo. They are excellent partners and they are continuing to grow in that region (technical difficulty) so other producer customers with whom we want to build relationships. And you can imagine that we are building relationships as it relates to Argo, but also to other plants that we might have an opportunity to construct in support of their drilling programs.

And then I guess turning to potential M&A activity to supplement your organic growth in the Permian, how do you balance the desire to expand and diversify your footprint, but keep in mind capital allocation needs and valuations for assets in the basin?

I think that's a good question that you ask. I think that we have historically exercised very good discipline even in markets that were hot. I think legacy MPLX is a good example before the MarkWest combination.

Bakken was the place to be. Everybody was deploying capital there. There were all sorts of acquisition opportunities and we ultimately did not make an acquisition there because there wasn't something that we thought was either strategic enough to go pursue or that met the IRR hurdles that we thought were important that needed to be met as we were deploying our capital.

So I would expect that we will have the same discipline in the Permian Delaware area. As people are deploying capital, we will look at opportunities. We want to make sure we have an opportunity to participate in those. It's one of the reasons why we are really working hard on our cost of capital making sure that we have as low a cost of capital as we possibly can so that we are well-advantaged or well-positioned to participate, but acquisitions will need to pass the IRR hurdle tests as we deploy capital.

Just a quick follow-up I guess from an earlier question, but on the MPC call, you mentioned that the butane alky project wouldn't be moving forward right now just given where the butane/octane spread is. I was wondering if you could just give us an update maybe on what that bucket of potential projects looks like that you talked about at the analyst day back in 2015. So I guess of the $6 billion to $9 billion that was highlighted, that alky project was the largest. Has anything else moved in or moved out or any update you can give us on maybe when some of those projects might be moving forward?

I think that when that information was presented, the world was very different even a year and a half ago. I think we were presenting some of those projects as an example of opportunity sets that we could pursue or that looked like they might be potentials.

The world has changed a lot in those 18 months. The alky project, as I mentioned, I think there was a question on the MPC call. Right now, we don't see the differential between butane and octane. That differential is not great enough to support the economics of that type of a capital expenditure right now. That doesn't mean it may not in the future, but the opportunity set or where people or producer customers are deploying capital has changed dramatically.

18 months ago, the Permian and the Delaware were not areas where lots of capital was going and so we want to make sure one of the things that we have prided ourselves on and MarkWest has been fantastic at has been being close to customers, solving problems for them, understanding their needs and providing a solution.

And our focus on being close to customers, developing more producer relationships and providing solutions will continue and my supposition is the list or the opportunity set will continue to evolve as new opportunities and as the commodity world changes and as the demand/supply profile changes in the United States and then the rest of the world.

Thanks, Don. That's helpful. And then maybe just to hit on Centennial one more time. So after the analyst day last month from Enterprise, the sense seemed to be that we could be getting some kind of an announcement on a project there very soon. And if I read the tone on the MPC call correctly this morning, it didn't seem quite as optimistic that we'd be getting something eminently.

So I'm curious has anything changed in the conversations you've been having over the past couple of weeks or is there still an opportunity to have something happen sooner? Should we be thinking about this as more of an evolving and maybe a longer-term process? Thank you.

Well, I think both parties are still very enthusiastic and have high hopes, are optimistic that something will happen here. I guess a reversal of that pipeline is for the benefit of producer customers. So at the end of the day, they are the ones that have the volumes that are going to move on the pipe and we are working and I know Enterprise is working with producer customers to understand what their needs are, what their requirements are and what their available volumes are to support a project like this. And when all the parties get to a point where they are very comfortable with those volumes, on the MPC/Enterprise side, they need enough volume to provide a reasonable return on a project that's going to require capital to do the reversal. And on the producer customer side, they need to be very comfortable in making a commitment over a period of time that they can realistically support.

And so that's where we are. I don't think anything unusual has happened in the last month or two that causes either party, MPC or Enterprise, to not believe that a project can coexist with Mariner East 2, but you do need volumes in order to support the economics of such a project.

Thank you, Cynthia and thank you for joining us today and your interest in MPLX. Should you have additional questions or would like clarification on any of the topics discussed this morning, Doug Wendt, Denice Myers and I will be available to take your call. Thank you.